It was one of the "quickest big hits in Wall Street history,"
as the
Wall Street Journal put it at the time.

In 1996, an investment group including Bain
Capital, the firm then run by Republican presidential
candidate Mitt
Romney, sold the consumer credit information business
Experian to a British retailer, making a $500 million profit.

Bain and the other investors who reaped that windfall had
closed the acquisition a mere seven weeks earlier, stunning the
investing world.

Another party was stunned by the deal, but for a different
reason. James McCall Springer believed that he had brought the
idea to buy Experian to Bain in the first place.

The Romney campaign declined to respond to a request for
comment on the lawsuits. Bain did not respond to a request for
comment. And, of course, disputes about finder's fees are not
uncommon; large sums are at stake for little work, a situation
ripe for claims of aggrandized roles.

Most accounts of Bain characterize the firm as full of
hard-working young men who sought to find troubled companies,
invest in them and turn them around. Romney's presidential
campaign website says that "under his leadership, Bain Capital
helped to launch or rebuild over one hundred companies." Romney
campaigns have embraced his reputation as a turnaround artist,
as he has run on his private equity record and his overhaul of
the 2002 Salt Lake City Olympics. He even titled his 2004 book
"Turnaround," a memoir and account of the 2002 Salt Lake City
Olympics.

But as the disputes illuminate, the reality of Bain's business
in the early years is more complicated.

Often, Bain wasn't finding companies on its own. Finders and
middlemen were more common in the early days of private equity
than they are now. Smaller firms would seek out acquisition
targets and bring them to the big buyout firms.

More significantly, Romney's firm wasn't always looking for
startups or troubled companies that it could turn around.

Private equity companies conduct a variety of transactions
other than buying startups with growth potential or troubled
firms ripe for a turnaround. Some seek out family-run
operations under the theory that those typically have a lot of
fat to cut. Some like "roll-ups," buying up a bunch of small
operations in one industry and combining them into a powerhouse
with economies of scale. Firms buy divisions of large
corporations that are trying to streamline their operations.
Some acquisitions fit more than one of these descriptions. The
constant is debt, and plenty of it. Private equity firms use
such borrowed money to maximize their gains.

The Romney campaign says Bain did various types of deals. And
it celebrates that Bain helped launch or rebuild some American
corporate stalwarts, like Staples,
Bright Horizons and Sports Authority.

Yet in addition, under Romney's tenure, Bain often
sought out solid businesses that didn't need to be turned
around. The reason: Such companies could operate under the
burden of the enormous debt that Bain would layer on
them.

"They always told us day one: They wanted profitable companies
that are doing OK, and they pay what they needed to pay," says
Phillip Roman, who heads up an eponymous mergers and
acquisitions firm that was involved in a legal dispute with
Bain in the 1990s similar to McCall Springer's. "There are
companies that like turnarounds," referring to other private
equity firms. "That's another business" from the one Bain was
in.

Bain in the 1990s was "doing more [of] the usual leveraged
buyout: Buy with a lot of debt, try to increase earnings and
sell as soon as possible," says Ludovic Phalippou, an expert on
private equity at the University of Oxford in England. The firm
was seeking "mature companies with high cash flow," he says,
with sufficiently stable earnings "to be able to leverage a
lot."

Financial data on many of Bain's acquisitions are not
available, since they were private transactions. But there are
several examples of companies that Bain took over that were
established and seem to have had enough revenue to support
leverage. Bain and another firm bought what they would name
Masland Holdings, a maker of automobile carpeting and
insulation, from Burlington Industries in 1991. Masland had
$305 million in sales that year, according to Dun &
Bradstreet. The firms took it public in 1993. Duane Reade was a
successful family-run business with revenue of $225 million
when Bain bought it in 1992, according to the Wall Street
Journal, and sold it five years later.

Early on, in 1986, Bain formed Accuride to purchase the
wheel-making division of Firestone Tire & Rubber, with some
executives from the company. Bain
structured the deal to have 40-to-1 leverage, according to
the Los Angeles Times, meaning Bain and its co-investors put an
enormous amount of debt on Accuride for every dollar they
invested. Accuride had sales of $215 million in its fiscal
1986, according to the Wall Street Journal. Accuride was sold
within a year and a half, earning Bain more than 20 times its
original investment, according to the Times. (Bain revamped
production and restructured executive compensation at the
company, according to a case study by a Bain partner, cited by
the Boston Globe.)

"I didn't want to invest in start-ups where the success of the
enterprise depended upon something that was out of our
control," Romney was quoted as saying in the Boston Globe in
2007.

The Wall Street Journal found that many of the businesses
Bain bought went bust, even when Bain reaped big financial
wins. The paper analyzed 77 businesses Bain invested in while
Mr. Romney led the firm from its 1984 start until early 1999,
finding that 22 percent either filed for bankruptcy
reorganization or closed their doors by the end of the eighth
year after Bain first invested. An additional 8 percent ran
into so much trouble that all of the money Bain invested was
lost. But overall, the hits more than made up for the losses,
and Bain recorded 50 percent to 80 percent annual gains in the
period, the paper found.

For a private equity firm, choosing the right company to buy is
critical, which is where firms such as McCall Springer came in.

In February 1996, Springer, who runs a small investment firm in
Los Angeles, woke up to press accounts that Bain and another
Boston-based private-equity company, Thomas H. Lee & Co.,
were in talks to acquire the business that today is known as
Experian. Alarmed, he fired off a letter to Adam Kirsch, a
managing director of Bain Capital. "As you are aware," Springer
wrote on Feb. 9, 1996, his firm "brought each of you the idea
and reasons for acquiring TRW ISS/REDI," as Experian was then
called.

"We provided you detailed business and strategic plans, company
organization and cost structures, management tendencies and
requirements, competitive and customer market investigations,
emerging market opportunities, new or improved product and
service opportunities," Springer wrote in a letter that is an
exhibit in a legal fight from that time.

Springer followed up that on Feb. 12, with a second letter to
top officials of Bain and Thomas H. Lee. The top addressee:
Mitt Romney.

Springer reminded Bain, as well as others involved in the deal,
that McCall Springer had written agreements with each party,
which he claimed acknowledged that Springer had brought the
idea to them a couple of years earlier.

Instead of paying up, Bain brought legal action against McCall
Springer. Romney's private equity firm sought a declaratory
judgment, a legal strategy to seek a quick resolution of a
matter, often in a jurisdiction of your choosing. McCall
Springer countersued, alleging it was owed equity and
management rights in the deal and seeking punitive damages. In
the end, Bain entered into an undisclosed settlement.

During the period that Mitt Romney was actively running Bain
during the 1990s, Bain had at least three other legal disputes
that were similar to the fight with McCall Springer. In each
case, a party claimed it was owed money for having brought Bain
an idea for an acquisition. When Bain carried out the
acquisition, the firm didn't pay the contractually obligated
fee, according to the claims.

Bain fought each in court, arguing that the agreements it had
with the parties didn't cover the specific circumstances of the
deals.

The Experian deal was a headline grabbing success for Bain,
which was formed in 1984. Great Universal Stores, the British
retailer, agreed in November 1996 to buy Experian for $1.7
billion. Bain and Thomas H. Lee had agreed to pay just over $1
billion in February, but had only closed the deal in September.

Private equity firms often claim that they develop companies,
helping them to grow more quickly and professionally. The added
value that the private equity owners contributed to Experian in
a mere seven weeks, however, was minimal.

Bain and Thomas H. Lee turned their $100 million investments
into $300 million each, a spectacular return in such a short
period. (The rest of the profit went to other investors,
including Experian management and TRW for its remaining stake.)

Eventually, Bain settled with Springer. Brokers and finders
learned to craft their agreements more stringently, they say.
"If you don't have a really good agreement, you will be
eviscerated in some shape or form," a person familiar with the
dispute says.

Phillip Roman had a similar dispute with Bain in the early
1990s.

In September 1994, Phillip Roman & Co. took Bain to court
in the Commonwealth of Massachusetts, filing a complaint for
declaratory and injunctive relief. Roman claimed Bain had
failed to pay it a finder's fee of $4.3 million for Bain's
takeover of Weider Health and Fitness, a health food and
fitness equipment business.

The M&A firm claimed in its suit that it had signed an
agreement with Bain in 1990 and brought Weider to the attention
of Bain partner Geoffrey Rehnert in January 1993. Bain
eventually bought Weider for $390 million. The problem for
Roman was that Bain had thrown it over for another finder firm,
according to the complaint.

The firms settled the case in December of the same year.

Asked if he felt angry with Bain about the dispute, he said:
"At that moment I did. Everybody feels that way when they think
they've been screwed."

But his firm worked with Bain subsequently on deals and
received fees without issue. Today, "I have no ill feeling at
all, not even close," he says.

Roman added that he had great respect for Bain and its high
standards. The companies the firm bought "had to be like nuns,"
he said.

In a third case, in November 1992, John Ewing, who had a firm
called J.G. Ewing & Associates, approached Bain to pitch it
an acquisition of the engineering and design firm Professional
Service Industries, Inc. The two sides made an agreement with
each other.

About a year later, Bain bought PSI, but didn't pay Ewing.
Ewing read about the pending deal in the newspaper. His lawyer
contacted Bain, arguing that the firm wouldn't have known about
the company if Ewing hadn't introduced it to the private equity
firm, and pointing out that the parties had an agreement with
each other.

Bain partner Rehnert wrote to John Ewing, saying it wouldn't
pay the fee. Bain is "not willing to pay a fee to a broker when
an investment bank has been engaged to conduct an auction since
bringing such a deal to our attention creates no value," the
Bain partner wrote to Ewing, according to a letter from Ewing's
lawyer to Bain.

Bain sued Ewing in U.S District Court in Massachusetts, seeking
declaratory judgment. Ewing countersued for $1.4 million. The
case was dismissed voluntarily in February 1995, an outcome
that generally indicates the parties settled.

In the final instance, the son of the owner of Anthony Crane, a
crane company that Bain took over, claimed that he had brought
Bain information that another crane company was willing to sell
itself to Bain. He claimed a finder's fee, which Bain disputed.
That case too appears to have been settled.